My first time investing—#21

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After spotting a video of her 3-year-old beaming about becoming a Sharesies investor, we had to get in touch with Wellingtonian Peti Morgan. Peti is the founder of The Leveraged Mama—a blog that's focused on helping mothers create more financial freedom in motherhood. Investing is a hot topic on the blog, so we asked Peti to share her investing story, and what it was like getting her 3-year-old daughter started as an investor with a Sharesies Kids Account. Here’s Peti...

Why did you start investing?

I'm a little embarrassed to admit it, but it was only a few years ago that I had a sort of epiphany with investing. I had been watching Nigel Latta's series 'Mind Over Money', and he talked about the wonders of compound interest. In this particular episode he mentioned an 8% return on investment. I thought "Huh? My savings account is like, 2%". Curiosity got the better of me and I did some Googling, and realised that investing was really the only way to get those kind of returns.

Before that point, my exposure to investing had consisted of those tedious share price listing pages in newspapers and movies like 'The Wolf of Wall Street'. It wasn't of interest to me, and it didn't seem particularly easy to do either. In my mind, investing was for 'rich people'.

Through my research, I came across the 'FIRE' Community (Financially Independent, Retire Early). A core FIRE principle is to invest in low cost index funds—meaning more of your money is invested, and less goes to fees. So I wanted a piece of these!

This is how I came across Sharesies! I started investing through Sharesies because it was so easy. It was a no brainer, really. I wanted to have a 'play' and get my hands dirty, so both my husband and I started investing around the same time. It wasn't scary, and it gave me the courage to review my KiwiSaver fund and fees too (I ended up switching funds).

Can you tell us about your first investment?

My first intentional investment was with Sharesies, and I bought a modest amount of funds just to get my feet wet. When Sharesies first launched, there were 10 or 12 funds to choose from, so I didn't have a hard time nailing down my selection.

I understood that I needed to diversify my investments. I also needed to be comfortable with my Portfolio based on my age, how long I intended to leave the funds alone for, and that it needed to align with my risk profile. My Sharesies Portfolio leans towards  'aggressive investor' sometimes, when I'm really aiming for a little more balance. This helps steer me back in the direction I want to go.

If I could turn back time, I would have put the effort into learning about investing 20 years ago. I would have invested a small amount every month. But I can't do that—so I'm happy for now that I've started at all!

What do you like about having an investment? Why should people try it?

Now that I have 'skin in the game' and have invested in companies in New Zealand and abroad, I'm more interested in the economy in general. I have a very tangible reason to care, because the ups and downs of the market affect my investments. Also, I'm more conscious about how business works in general. Investing has given me a reason to learn about how markets work, so it's expanded my knowledge a great deal. It feels nice to have been brave enough to venture into a world that was once so unknown.

I also like that my money is being 'put to work' rather than going off to die in a low interest savings account at the bank. My money’s working for me, rather than me always having to work for my money!

Tell us about setting your 3-year-old up with a Sharesies Kids Account? What inspired you to do this?

We had intended to wait until we were completely debt free before starting up any kind of savings for my daughter (you can't earn money while you owe money, as my friend Ruth would say!). But when Sharesies offered Kids Accounts, I actually felt confident enough to open one for my daughter. I felt that I knew enough about risk and diversification to be able to start investing money for her.

While we're still focused on paying off debt, we'll put some money into her Sharesies account on her birthday and at Christmas. As soon as we're debt free, we'll start investing into it monthly—to take better advantage of dollar-cost averaging.

I feel good that this money will be put to work! We intend to leave it in there until she is 'of age' and then she can choose to do what she wishes with it. Of course, I hope that she'll use it for something like a house deposit—but it will be her choice. I hope by then I've taught her enough to make a wise decision!

How did you feel after she became an ‘investor’ for the first time? How did your daughter feel?

I have to say I felt a mix of virtuous, wise, and smug, yet grateful, and privileged! Sharesies has made it so easy to invest in 2019, for first-time investors of ALL ages, that it would be crazy not to take advantage of that.  

I don't think my daughter understands investing yet, but I have faith that all the little actions we take when our kids are young influence them as they grow up. Everything we do, they see and take in. This is one of those things that I hope to impress upon her.

How have you been talking to your daughter about investing? How do you plan on keeping her involved as she gets older?

When we put money into her account for her, I want to make it a fun occasion so that she looks forward to it. I'd like her to choose where to invest the money, as over time this will show me how much she understands. Of course there's risk in that in the early days of her life and her Portfolio, but I think it's ok for mama to make small adjustments to balance things up for her in the background!

Eventually, when she's ready, she can take over the decisions. I want her to be a conscious, intentional investor who isn't afraid to experiment a little to learn. So we'll find ways to encourage that journey!

People often think you need loads of money to invest. What tips would you give to mums who want to start investing for their kids?

If they don't already invest themselves, setting up a Sharesies Kids Account is a good way to learn and build the confidence you need to be able to teach a small person.

One of the first posts I wrote on The Leveraged Mama was "Mamas, You Can Afford To Start Investing Today". A key point I made in that post is that you don't need to be wealthy to start investing—as companies like Sharesies have changed the entire ballpark! You can start with as little as $5. I used to think that you needed $5k-$10k to be able to make only one investment. My my how things have changed!

(Editor: Since this post was written, there is no longer a $5 minimum investment. You can invest as much or as little as you can afford. Our post on fractional shares explains it all.)

What is the best piece of advice you’ve given (or been given) about investing?

I think the most valuable piece of knowledge I've attained is to watch your fees. High fees don't necessarily mean high returns—in fact it can mean a lot less in your pocket over time, due to the way compound interest works. The more money that gets taken out for fees, the less room there is for compound interest to work it's magic.

Advice that I'd like to pass on is—if you have regrets yourself about not starting to invest earlier, you can help your kids to avoid the same mistake by opening a Sharesies Kids Account for them!